VS Naipaul is this year's winner of the Nobel Prize for literature, the world's most prestigious and - with a value of $1,000,000 - richest literary award. The announcement was made at noon today in Stockholm.

Naipaul, considered the leading novelist to emerge from the English-speaking Caribbean, has long been tipped to win the award. His work, which includes novels, short stories and travel writing, explores the disorder created by the collapse of empire and the alienation of the individual.

The book which made his name, A House for Mr Biswas (1961), describes Trinidad in the 1930s-50s from the perspective of an Indian immigrant, modelled on his father. In later writing he has described the impact of colonialism and nationalism on the third world.

Naipaul was chosen, the academy said, for his "incorruptible scrutiny in works that compel us to see the presence of suppressed histories". They singled out for particular praise The Enigma of Arrival (1987), the story of a declining landed estate in southern England and the colonial background of its proprietor, calling it "an unrelenting image of the placid collapse of the old colonial ruling culture and the decline of European neighbourhoods".

The head of the academy, Horace Engdahl, who told Naipaul of the award by phone, said "He was very surprised and I don't think he was pretending. He was surprised because he feels that as a writer he doesn't represent anything but himself."

"I am utterly delighted. This is an unexpected accolade. It is a great tribute to both England, my home, and India, the home of my ancestors and to the dedication and support of my agents Gillon Aitken," Naipaul said in a statement.

Martin Amis was quick to applaud the academy's choice. "His level of perception is of the highest, and his prose has become the perfect instrument for realising those perceptions on the page," Amis said, adding that Naipaul's travel writing "is perhaps the most important body of work of its kind in the second half of the century".

Naipaul was chosen by secret ballot from a shortlist of five. The rest of the shortlist remains shrouded in secrecy - nominees are not publicly revealed until 50 years after the prize is awarded - but other authors rumoured to be in the running included Israel's Amos Oz, South Africa's JM Coetzee, Canada's Margaret Atwood and America's Philip Roth.

Engdahl said the academy had quickly dismissed any suggestion of suspending the award in the wake of the terrorist attacks on America and the retaliatory strikes on Afghanistan.

"Literature is the basis of a worldwide community, which is obviously not based on violence or hatred but which paves the way of mutual understanding between cultures and people," he told the Associated Press.

"If any prizes at all should be distributed in a year like this, it ought to be the literature prize and the peace prize - just to show the world that this patient process of bringing the nations together mustn't cease."

In recent years, political comment has been read into the award. Last year's winner, the little-known exiled Chinese novelist and playwright Gao Xingjian, now a French citizen, drew anger from China. Naipaul, though undeniably a colossus of the book world on literary merit alone, is also no stranger to political controversy. He caused an outcry earlier this month by comparing Islam's effects on the world to those of colonialism.

"It has had a calamitous effect on converted peoples," he said, pointing in particular to Pakistan. "To be converted you have to destroy your past, destroy your history. You have to stamp on it, you have to say 'my ancestral culture does not exist, it doesn't matter'." He described the "abolition of the self demanded by Muslims" as worse than "the similar colonial abolition of identity". In answer Ahmed Versi, the editor of the Muslim News, described Naipaul as "basically a Hindu nationalist, who has a deep dislike of Muslims".

Engdahl conceded that Naipaul might be seen as a political winner, but added: "I don't think we will have violent protests from the Islamic countries and if they take the care to read his travel books from that part of the world they will realise that his view of Islam is a lot more nuanced."

"What he's really attacking in Islam is a particular trait that it has in common with all cultures that conquerors bring along, that it tends to obliterate the preceding culture," he said.

Academy board member Per Wastberg told Reuters that Naipaul was critical of all religions. "He considers religion as the scourge of humanity, which dampens down our fantasies and our lust to think and experiment."

Naipaul - who has also in the past criticised New Labour in the strongest terms - has a long history of heated literary criticism, too. Interviewed around the publication of his last novel, Half a Life, he called EM Forster "a nasty homosexual", Wole Soyinka "a marvellously establishment figure, actually", Dickens a self-parodist and Joyce unreadable.